In Executors of Beryl Coulter v HMRC [2016] EWCA Civ 938 the Court of Appeal confirmed that a legacy to a Jersey charity is not an exempt transfer for inheritance tax.

Transfers to qualifying charities are exempted from inheritance tax (IHT) by IHTA 1984 section 23.  The definition of charity in FA2010 schedule 6 part 1 includes the condition that charities must be subject to the jurisdiction of a UK court or that of another EU member state.

The court of appeal found that the trust was not subject to the jurisdiction of the courts of the UK nor another EU member state (as Jersey is not a member of the EU).

The charitable trust therefore did not meet the required conditions and definitions in IHTA 1984 or FA 2010 and relief from IHT was not available.

A further appeal in this case as to whether the limitations of the IHT exemption are unlawful as regards the EU freedom of movement of capital was adjourned but was heard in June 2017. The Court of Appeal found:

Links

Freeview guides:

IHT: charitable giving

IHT relief: 10% discount for charitable bequests

IHT: Inheritance Tax Rates and Allowances

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Non-domicile status and tax

Estate planning checklist

Case reference:

Executors of Beryl Coulter v HMRC [2016] EWCA Civ 938